The CBOE's Volatility index (VIX) has reported its biggest jump since US President Donald Trump was elected last November, as rising political tensions in the States spooked investors.
Markets are unnerved as a result of Trump's firing of FBI director James Comey, who has since released memos of his conversations with the President who is said to have told Comey to "let go" of the investigation into National Security Advisor Michael Flynn, according to the Financial Times.
The US Justice Department has since named former FBI chief Robert Mueller as special counsel to investigate Russia's alleged interference in the US election, and the possible ties between Trump's campaign and Moscow, according to Reuters.
The rising political tensions have contributed to the VIX climbing 3.4 points to 14.07 on Wednesday, the biggest rise since September last year, and the second-biggest increase since the day after the UK voted to leave the European Union.
The VIX tracks options to see what expectations for the S&P 500 volatility will be over the next 30 days. Last week, the VIX hit a 23-year low, but has risen sharply since.
Furthermore, the S&P 500 fell 1.8% to 2,357 points on Wednesday, as questions still linger over the Trump administration's ties with Russia.
Gold also jumped 1.7% to $1,258 a troy ounce, as investors sought shelter in safe-haven assets.
In morning trading, the FTSE 100 was 1.32% lower at 7,404 points.
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